What Are the Treatments for Jointly Held Assets in Divorce?

by Beverly Bird

    The longer a couple remains married, the more jointly-owned assets they’re likely to acquire. Their lives become so financially intertwined that even their separate property – normally immune from distribution in a divorce -- becomes an issue. Different states use different laws to decide how much property each spouse receives. However, the methods used to assign items of property to each spouse are largely the same.

    Definition of Joint Assets

    All states differentiate between separate assets and joint marital assets, and the distinction is usually relatively clear early on in a marriage. Joint marital assets are anything a couple acquires together. They can also include assets purchased “in contemplation” of marriage, such as when a couple buys and closes on a home a few months before their wedding date. Separate assets, commonly referred to as separate property, are items a spouse owned before the marriage or received as an inheritance or gift. Such property is usually immune from distribution in a divorce, unless the spouse with ownership takes an action that "commingles" it with marital property. The longer spouses are married, the more likely it is that this might occur. For example, one spouse might contribute to the mortgage payments of the other spouse's premarital home, or deposit income into an account that once solely held inherited funds.

    Community Property Law

    In nine community property states -- Wisconsin, Texas, Washington, Nevada, New Mexico, California, Arizona, Idaho and Louisiana -- marital assets are divided neatly down the middle when a couple divorces. It doesn’t matter if both spouses hold title to a particular asset in joint names, or if one spouse holds title in his separate name. If spouses acquire property during the marriage, it’s a joint marital asset. Commingled separate property also becomes a joint marital asset, unless the owning spouse can provide decisive proof identifying which portion of the commingled asset traces to his original separate property.

    Equitable Distribution Law

    In equitable distribution states, judges typically begin with the premise that joint marital assets should divide 50/50 between spouses in a divorce. They may then take case-by-case factors into consideration, which can ultimately result in a 60/40 split or even a 70/30 division instead. Generally, judges consider the longer a couple is married, the more likely it is they have contributed equally to the acquisition of marital assets, through either household labor or income, and the division is closer to 50/50. Just as in community property states, actual title to the property is immaterial. Even if one spouse holds title in his sole name, if he acquired it during the marriage it’s a joint marital asset.

    Asset Allocation

    Regardless of whether a court divides marital assets 50/50 or if one spouse receives a disproportionate share, courts usually don’t force liquidation or sale of a specific asset so that each spouse can take a portion of its value. Instead, judges usually "mix and match" assets to create the distribution. For example, one spouse might receive three assets with values of $25,000, $25,000 and $60,000 while the other spouse receives two assets valued at $55,000 each. Each spouse takes ownership of $110,000 in property, creating an equal division.


    When spouses own a limited number of marital assets, it’s sometimes difficult to apportion them so the court-ordered equation comes out right. In this case, a judge might award the property to one spouse and order him to buy out the other spouse’s interest. This is commonly the case when a couple owns only their marital home. Both spouses are entitled to a share of the home’s equity. When other assets are available equaling half of the equity, the spouse not keeping the home can take ownership of those assets instead. Otherwise, the spouse retaining the home must ordinarily compensate the other with a cash payment. He usually achieves this by refinancing the existing mortgage for enough additional money to pay off his ex’s equity interest.

    About the Author

    Beverly Bird has been writing professionally since 1983. She is the author of several novels including the bestselling "Comes the Rain" and "With Every Breath." Bird also has extensive experience as a paralegal, primarily in the areas of divorce and family law, bankruptcy and estate law. She covers many legal topics in her articles.